Scott McGlashan to run dublin-based oeic fund to be benchmarked against japanese topix index
Having poached specialist Japanese fund manager Scott McGlashan from Jade, JO Hambro Capital Management has launched its first Japan fund. The JOHCM fund is also set to be the first offshore vehicle to be sold to UK investors through the Cofunds platform, if negotiations are successful.
The fund is already available in the UK through Fidelity's Fundsdirect.
The Japan Fund is a Dublin-based Oiec, which will have 40-60 holdings. The fund will be benchmarked against the Japanese Topix Index with a high expected tracking error.
McGlashan said: "The timing is good as Japan is now going through an economic recovery due to a number of factors including a changing mindset in corporate Japan - profits matter, company re-structuring, and significant recent export growth to China and other Asian economies."
The portfolio is likely to have a mid-cap bias and sectors are likely to be in less-known and fashionable areas. McGlashan prefers not to hold stocks in international brand names but rather focuses on stocks that are mis-priced.
For example, out of a total universe of 3,000 listed Japanese stocks, McGlashan points out that most brokers focus on the top 100 or so stocks. This leaves a large universe of potentially inefficiently-priced companies - therefore, most of the stocks in the portfolio will be outside the top 100.
For the fund, stocks are chosen that have good medium-term growth prospects - strong and healthy balance sheets on attractive valuations relative to their historic valuations, their domestic peers and international companies.
Stocks are sold when reasons for purchase no longer apply, for example if profits disappoint, medium-term outlook has deteriorated, or expected corporate action has not materialised. A catalyst is identified for market re-evaluation, such as earnings surprise, re- structuring, corporate action, as underpriced stocks can stay underpriced indefinitely unless the market's attention is grabbed.
Dead wood is eliminated actively and the proceeds re-invested in better opportunities. The fund turnover is relatively high - about 100% annually.
McGlashan has 23 years' experience as an investor in Japan. He previously worked for Perpetual where he was director and head of Far East Investment. He left in 2000 to co-found the boutique investment house, Jade Absolute. Out of the 14 years on record, the funds managed by Scott have outperformed the Japanese stock market 12 times.
The minimum investment is £1,000 for retail shares and it will also be available in euros or yen. The launch period is between 10 and 28 May 2004.
The initial charge is up to 5% and annual management fee is 1.25%. Performance fee is 15% of fund outperformance of benchmark +1%. Intermediaries' commission is 3% initial and 0.5% renewal.
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